It probably started out as All-ee, all-ee, outs in free, a call from the person who was it letting those hiding children (the outs) know it was safe to come back to base in the children’s game of hide-and-seek. The phrase can also be used to coordinate hidden players in the game kick the can, where a group of children hide within a given radius and a seeker is left to guard a can filled with rocks.
If the core phrase is All outs in free, the -ee is added, and the all is repeated, for audibility and rhythm. Another approach: in Britain, it was common for the town crier to pre-phrase a declaration with All Ye, All ye meaning that all the citizens of the town needed to be aware of the information the crier was about to state, and early Scots-Irish immigrants to Appalachia would have brought that phrase with them.
“When I was growing up in the American South,” says Charles Wilson in The New Encyclopedia of Southern Culture,”we actually said, ‘All ye all ye outs in free’ when playing hide-and-seek (although we called it ‘hide-and-go-seek).” Regional variations include:
Ollie Ollie in come free,
Ollie Ollie oxenfreed,
Ollie ollie in come free-o
Ollie ollie oxen free
Ollie ollie oxen free-o
Oly Oly oxen free,
Oly Oly ocean free,
Alley Alley oats in free,
All-ye All-ye outs in free
Ole Ole Olsen free (more common in areas settled by Scandinavians)
Ole Ole Olsen free-o
Children’s sayings were hardly recorded until the 1950s, and they are very variable. That’s because they’ve been passed down orally from one generation to the next, with no adult intervention or correction. But one educated guess is that the phrase’s root is an English-Norman French-Dutch/German concoction: “Alles, Alles, in kommen frei” or “Alle, alle auch sind frei” (literally, “Everyone, everyone also is free”)or “Oyez, oyez, in kommen frei!”
“Allez, allez” was a Norman addition to the English language, pronounced “ollie, ollie” and sometimes written “oyez, oyez” and meaning “everyone.”
The game hide-and-seek is at least four centuries old, and it seems that the call phrase discussed here was in common use by the 1920s, and probably earlier (‘home free’ is found in print in the 1890s).
sources: http://snipurl.com/3octq [songfacts.com]
The New Encyclopedia of Southern Culture, by Richard Pillsbury, Charles Reagan Wilson, Ann J. Abadie, University of North Carolina Press, 2006
Words to the Wise, by Michael Sheehan